Additional costs for the buyer of the house when obtaining it can reach up to 7000 dollars, and not everyone has the opportunity to include them in the mortgage loan

Paying off your own home does not stop with the approval of the loan. There are costs that are not taken into account in the financing and turn what was designed as a celebration of the realization of the desired home into a pain, because one must try to cover the unplanned values ​​due to ignorance, among these expertise, writing, legalization, notarial documents and procedures for obtaining meters (water and electricity services) in the name of the customer.

When acquiring through a mortgage loan, costs such as review of real estate, mortgage constitution, tax payment, notarial rights and registrationwhich is covered by the loan seeker.

The Bank of the Ecuadorian Social Security Institute (Biess) finances most of these additional costs. The value is added to the approved loan amount, but the associate or retiree must have the ability to pay. The amount must not exceed the value of the property.

The estimated cost of these costs depends on the canton in which the mortgaged property is located.

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The six cantons in the country with the highest amounts are Morona, in Morona Santiago ($6,584); Guayaquil, in Guayas ($6,155); Good Faith, in Los Ríos ($4,883); Playas ($4,821), Samborondón ($3,776) and Daule ($3,664)these last three in Guayas, according to a report from Biesso.

Meanwhile, the lowest values ​​were recorded in Isidro Ayora, in Guayas ($165); Las Naves, in Bolívar ($168); Carlos Julio Arosemena, in Napo ($219); Olmedo, in Manabi ($247); and Alausí in Chimborazo ($256).

However, of 93 of the country’s 221 cantons, there are no details and values ​​of all costs to be paid, and of 21 there are no records, according to this Biess document.

Carlos, 42, is buying a house in one of the urbanizations of the parish of La Aurora in the canton of Daule, which is part of the urban conglomerate of Guayaquil, known as Greater Guayaquil.

He paid ten installments of deferred entry for 20 monthsbut You just found out that you will need more money if you want to own a home when you finish paying these monthly installments and the difference loan finally materializes.

To the total listing value of $8,340, you must add $377.2, which goes to notaries, $700 for electricity and water, and $3,664 for expert fees (which could be covered by Biess), i.e., a total of $4,741.2 for a house that it costs $83,400.

The amount varies depending on where the house is located. In one priced at $150,000, this added value can exceed $7,000, according to Luis Valero Brando, a member of the Guayaquil Chamber of Construction.

The value of additional costs can reach between 4% and 5% of the price of the property, according to the calculations of the real estate franchise Travi Bienes Raíces.

That’s what worries me the most the seller also told Carlos that he had to cover the capital gains taxan amount that ranges between $4,000 and $5,000, despite the fact that the law indicates that the one who pays is the seller.

This is the money that Carlos must pay as a condition for the delivery of the house and the processing of the mortgage loan, which will cover the difference in the price of the property that he intends to pay for a period of 25 years. “It is not so easy to get all that money“, he says.

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Carlos signed a private contract indicating that the penalty, if he abandons the purchase of the house, is a percentage of the total cost.

“I had the opportunity to buy another one, but I saw that if I retire now, they won’t pay me a penny back, and before that I will owe about a thousand dollars because the penalty is not up to the amount of the down payment, but to $83,400, which is the cost of the house“says Carlos, who is married and has two children.

Now you will observe if in the same contract that you signed, without first reviewing it thoroughly, you undertook to cover this capital gains tax as well. “When you sign, there are about 40 pages, a lot of letters, it’s really clear how it will proceed, it took me about two hours, and the children were already pressuring me”, he admits.

Marcos Armijo, CEO of real estate franchise Travi Bienes Raíces, confirms that Carlos’s situation is common when a home is bought without precautions or advice.

“In these private contracts, it is prescribed that the buyer bears the capital gains tax, so the acquirer’s hands are tied because he signed the document. The law is clear, surplus value is a profit tax and therefore the one who owns and benefits from it must pay, in this case it will always be the seller“.

The situation arose due to the lack of government control over the collection of this municipal tax that must be paid in order to continue with the works.

April is the best month of the year for selling houses, because dependent workers receive, for example, their profits with which they have capital to cover reserves and down payments.

But You must read the contract, familiarize yourself with the penalties if you abandon the purchase and be clear about paying capital gains tax before signingadds Armijo.

Carlos says he will continue with the purchase and aims to remain subject to the Biessa loan until the time the mortgage is placed, which is expected to be between next December and January.

Valero indicates that is one of the forecasts to consider the project where the house was bought has a municipal building permit. “The seller may be required to attach a copy of the urban planning permit to the reservation contract. There are certain plans for real estate that are done without permits and when they start building they have problems. You must have a city permit to sell.

The second tip is that the project is done through a trust, in which the money is blocked until the coverage point is reached. “This is when the sale already covers the cost of construction, so there is less risk that it will not be built. There, the entrepreneur cannot take that money for other works or projects. The contract must state that the money from the payment goes to the trust“.

One of the problems is what can happen during the ticket repayment (period of up to two years), a period when the customer may be late with regular payments or lose their job, then when the loan is processed. with the difference that in the end it is no longer approved.

Therefore, it is important to know the penalty. Valero says that such a situation has occurred in 200 of the three thousand properties he has sold.

“In these cases, a part of the registration minus the fine, which amounts to 5 to 10 percent of the canceled amount, is returned, since the promoter spent it on sales commission, advertising, contract registration with a notary public. This can be avoided if the buyer asks the seller to do a paying ability study to see if his income will allow him to buy a house for $150,000 or whatever price”.

The return is determined when the house is finally sold.

The construction industry copes with inflation of 3.5% per year

Inflation in the construction industry is growing, driven by the cost of labor.

The minimum wage is increased every year by state regulation.

Annual inflation in the sector is currently 3.5 percent.

During the COVID-19 pandemic, it reached 7% due to an increase in the cost of transporting imported materials, as well as an increase in the prices of iron, glass, aluminum and copper due to the war between Russia and Ukraine.

“With current inflation, if I don’t buy a house today but ten years from now it will probably cost 30% more, for safety reasons it’s always a good time to buy a house. And the best thing in the country is to do it through Biess, because this loan has life insurance, if the debtor dies, the debt does not remain, and the properties are for those who inherit them – says Valero.